Use the following to answer questions .
Exhibit: Shifts in Aggregate Demand and Aggregate Supply and Inflation-Unemployment Phases
-(Exhibit: Shifts in Aggregate Demand and Aggregate Supply and Inflation-Unemployment Phases) The recessionary gap at point 4 was created
A) during the Phillips phase that occurred when the economy moved from point 3 to point 4.
B) when policymakers pursued expansionary policies to move the economy from point 3 to point 4.
C) during the stagflation phase that occurred when the economy moved from point 3 to point 4.
D) during the recovery phase when economic agents revised their price expectations in higher prices.

Question

Use the following to answer questions .
Exhibit: Shifts in Aggregate Demand and Aggregate Supply and Inflation-Unemployment Phases 
-(Exhibit: Shifts in Aggregate Demand and Aggregate Supply and Inflation-Unemployment Phases) The recessionary gap at point 4 was created
A) during the Phillips phase that occurred when the economy moved from point 3 to point 4. 
B) when policymakers pursued expansionary policies to move the economy from point 3 to point 4. 
C) during the stagflation phase that occurred when the economy moved from point 3 to point 4. 
D) during the recovery phase when economic agents revised their price expectations in higher prices.

Quizplus · Accepted Answer

The recessionary gap at point 4 was created during the stagflation phase, which typically involves high inflation and unemployment, leading to a decrease in aggregate demand or supply, moving the economy from point 3 to point 4.

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